View full sizeJohn M. Vincent/The OregonianTerry Brandt and his wife, Patricia, were surprised to learn they could refinance their house with a VA loan due to Terry's Vietnam-era service in the National Guard.

By PHIL FAVORITE‌SPECIAL WRITER

As a small-business owner and founder of a nonprofit, Terry Brandt always considered himself an “outside the box” thinker.

So when it came time to refinance the home he bought in Eastmoreland more than 20 years ago, he came up against some hurdles that required some creative thinking. A big one revolved around his income as a 1099 tax filer, which made it difficult to show a steady and consistent source of income over time.

When he met with mortgage broker Dick Maurer, with ENG Lending in Lake Oswego, the two discussed some interesting options, including one Brandt never considered.

“Dick asked me if I’d ever been in the service,” Brandt said. He had, having served time in the National Guard during the Vietnam War. “Frankly, I never really thought about any VA benefits that would have accrued as a Guardsman.”

Suddenly, the wheels started turning. Maurer rolled up his sleeves and found just the right deal to help Brandt get his refinance approved with a VA loan.

Government-backed loans from the U.S. Department of Veterans Affairs are commonly thought of as a tool for helping recent veterans get started on the path to homeownership. They are considered a benefit to servicemen and women who earned honorable discharge and who meet loan qualification standards. The rates for VA loans often are a full percentage point lower than their conventional counterparts.

View full sizeJohn M. Vincent/The OregonianThe Brandts' home would have been difficult to refinance conventionally because he is self-employed.

But Maurer said a recent trend has seen longtime veterans — those who served during the Korean and Vietnam Wars and even as recently as the first Gulf War — taking a second look at VA loans as a viable option for purchasing a high-end home or doing a modern refinance.

“We’re starting to see vets who are further along in life that can afford more and can spend more take another look at this,” he said. “Maybe they used their VA benefits to go to school back in the ’70s, and they bought a house after college. Now they’re a few houses down the road and want to do something new but have found the private market for conventional loans has dried up a bit.”

In this demographic, VA loans make even more sense because eligible veterans can borrow up to $417,000 with no down payment. Jumbo loans require 25 percent down payment on any amount of the loan above that number.

“So if you buy a house for $617,000, which is $200,000 above that level, you’d have to put down $50,000,” Maurer said. “That comes out to an 8 percent down payment. Because the VA is guaranteeing the loan, jumbo loan borrowers typically enjoy a 1 percent lower interest rate than a conventional jumbo loan and also don’t have monthly mortgage insurance premiums (MIP). A combination of those two will save you hundreds of dollars a month.”

Because of the variability in Brandt’s income, Maurer said a VA loan made sense because “conventional loans are somewhere between excruciatingly difficult and impossible to get when you’re self-employed or have a significant amount of variable commission.”

In Brandt’s case, his jumbo VA loan makes even more sense because it’s assumable and can be offered to a buyer at selling time, when experts expect rates to be considerably higher.

“If rates do increase, that’s going to be a significant benefit when I do sell my home,” Brandt said. ‌

View full sizeJohn M. Vincent/The OregonianA four-bedroom home at 12467 S.W. St. Andrews Lane in Tigard was built by JT Roth Construction. It's listed for $529,950 and could be financed with a lower-cost jumbo VA loan and up-front assistance from the builder.

Builders on board

With the local market for newly built homes heating up over the last six months — following a long downturn that put a lot of local builders out of business — builders see a market forming with buyers who can qualify for loans large enough to purchase with no money down.

Tim Roth, owner of JT Roth Construction, said he would be willing to cover some of the closing costs on one of his newly built homes for a veteran who plans to finance the sale with a VA loan.

“It’s a great opportunity for the seller to make contributions to help them get into a home,” Roth said. “There will be some up-front costs, and to that extent, I could make a contribution.”

Roth has a luxury home for sale in the Mountain View subdivision in Tigard that could be just right for a veteran who can qualify for jumbo VA loan.

The 3,240-square-foot home features a gourmet kitchen, a formal dining room with box-beam ceiling, a master suite with luxurious bath and a separate guest quarters with a full bath, closet and kitchenette. Crown molding, hardwood floors, granite counters and an outside living space with barbecue and fireplace are among the home’s many amenities.

View full sizeJohn M. Vincent/The OregonianThe Tigard home by JT Roth, which features outdoor living space, will be held open Sunday, Nov. 11, from 1-3 p.m.

With four bedrooms, 3.5 baths and a three-car garage, the home — at 12467 S.W. St. Andrews Lane — is listed for $529,950 with Steve Baucom of Keller Williams Realty Professionals. It will be held open Sunday, Nov. 11, from 1 to 3 p.m.

“VA now is in lockstep with local government authority, so you don’t have all of the new construction requirements that you had to have 20 or 30 years ago that are difficult for builders,” Maurer said. “You can buy a brand-new home the same way you can buy with a conventional loan.

“I would think that if you were a local builder you would have no problems paying closing costs to get them in. If you have a veteran who’s short of cash but has a job, builders should help them with their closing costs to get them into a newly built home.”

Phil Favorite is a Milwaukie-based freelance writer. He can be reached at phil@yourstorywelltold.com